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Why Baidu, Bilibili, and Qudian Stocks All Popped Today

By Rich Smith - Dec 30, 2020 at 1:23PM

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A new Europe-China trade deal does good things for Chinese stocks.

What happened

Shares of China-based, U.S.-listed stocks are on fire Wednesday. As of 12:45 p.m. EST, shares of Baidu ( BIDU 1.46% ) -- the "Chinese Google" -- were up 12.5%, online entertainment provider Bilibili ( BILI 8.28% ) was up 13.8%, and consumer finance company Qudian ( QD 4.08% ) had climbed 14%.

These stocks may be listed in the U.S., but you need to look to Europe to find the reason they're all going up.

Chinese and European Union flags overlapping

Image source: Getty Images.

So what

This morning in Brussels, European Union negotiators finalized the terms of a historic investment agreement with China. Seven years in the making, the new Comprehensive Agreement on Investment is expected to grow international trade between the EU and China, facilitate cross-border investment, and "strongly stimulate" the economies of both nations, according to Chinese president Xi Jinping.  

CNN highlighted the financial services sector, electric vehicles, and healthcare as three areas of the Chinese economy likely to benefit especially from the trade accord. With Qudian specializing in consumer finance, and Baidu accelerating its move into electric-powered autonomous vehicles, the reasons for at least two of these three stocks moving higher today would seem pretty clear.

Meanwhile, comments in The Financial Times to the effect that the deal confirms China's role as "an irresistible force" in the global economy suggest that this is good news for Chinese stocks in general.  

Now what

Don't expect to see immediate benefits for any of these three companies, however. Just because negotiators have signed the deal doesn't mean that their respective legislatures will ratify it, and the Comprehensive Agreement can't go into effect before that happens.

According to FT, EU officials are targeting an effective date for the agreement no earlier than 2022.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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Stocks Mentioned

Bilibili Stock Quote
Bilibili
BILI
$61.72 (8.28%) $4.72
Baidu, Inc. Stock Quote
Baidu, Inc.
BIDU
$149.81 (1.46%) $2.16
Qudian Inc. Stock Quote
Qudian Inc.
QD
$1.37 (4.08%) $0.05

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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